Treasury corrects MCD Orders: An amending Order corrects certain parts of the Treasury Order implementing the Mortgage Credit Directive (MCD) into UK law. The main corrections:
- ensure that a non-residential or buy-to-let mortgage which would be exempt from being regulated as a credit agreement if entered into immediately before 21 March 2016, but which is a regulated credit agreement at that time (for instance because it was entered into before the existing exemption for these mortgages came into force), does not fall within the definition of “consumer credit back book mortgage contract”. As a result, these mortgages will continue to be "regulated credit agreements" for FCA purposes, rather than being treated as regulated mortgage contracts when the MCD changes take effect;
- clarify that where a person has permission to advise on regulated mortgage contracts immediately before 21 March 2016, the person is to be treated from that date as having permission to carry on that regulated activity in relation to all contracts which are regulated mortgage contracts after 21 March 2016, and not only in relation to those contracts which would have been regulated mortgage contracts before that date.
Separately, Treasury has published draft amendments to the Regulated Activities Order (RAO) that will:
- clarify the scope of the exemption from regulation as a credit agreement for mortgage contracts and home purchase plans, so that they are only exempted from regulation as credit agreements if entering into them is in fact subject to regulation in one of those other categories;
- ensure that mortgages dating from before 31 October 2004 and which are currently regulated as credit agreements, are instead regulated as mortgages from 31 March 2016; and
- ensure that an existing exemption from the regulation of credit agreements remains available for equitable mortgages used as bridging loans once they become regulated as mortgages rather than credit agreements from 31 March 2016.